Statement on Gov. Bill Ritter's latest budget reduction plan

Contact: Joe Watt
Wade Buchanan
303-297-0456

Statement on Gov. Bill Ritter's latest budget reduction plan

Wade Buchanan, President, Bell Policy Center

October 28, 2009

Gov. Bill Ritter today announced a new round of budget cuts and adjustments to keep the state budget in balance in the face of continuing weak revenues due to the ongoing national recession.

These are the most challenging times for state budgeters in decades, and we think the Governor continues to do a responsible job navigating among bad options. But the toughest choices still lie ahead.

When the economy declines, the work of state government must increase. That is clearly the case in this recession. Almost half a million Coloradans now rely on the state's Medicaid program for health coverage - almost 25 percent more than at the beginning of the recession and about eight percent more than predicted just this spring. The state's community and state colleges have seen double-digit increases in enrollment as many out-of-work Coloradans return to retool and improve their skills in this changing economy. Safety-net programs are struggling to meet significant increases in need.

In the face of this, we think the governor has been wise to use the Federal Recovery Act funds rather than to slash critical state services at the time of greatest need. That's exactly what the funds are intended to be used for.

But a serious problem looms for the next budget year (2010-11). Without an increase and extension of federal Recovery Act funding for states, and without the state itself finding additional resources, funding for essential state services will fall off a cliff and plummet to unprecedented lows.

The purpose of Recovery Act funding for state governments is to provide a bridge to recovery for Medicaid, higher education, human services and other essential state systems. And since it is now clear that the recession will be deeper and longer than first thought, it also is clear that the bridge to recovery needs to be longer, too. If funding from the Federal Recovery Act ends before state revenues recover, the results will be catastrophic for hundreds of thousands of Colorado families.

It's also clear that, when the Legislature returns to work in January, lawmakers must look not just at how to make additional cuts, but also how to raise more revenues. The state provides a number of tax breaks to various interests and for various purposes. In ordinary times, these breaks may make sense – and some may continue to make sense today. But given the gravity of the situation, and the depth of the budget gap that now looms before us in 2010, everything needs to be on the table.

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